Your Southern Road to China Hong Kong/ Dongguan, Your Manufacturing Platform

Transcription

1 Your Southern Road to China Hong Kong/ Dongguan, Your Manufacturing Platform Introduction Dongguan in southern China s Pearl River Delta is one of the Chinese mainland s fastest-moving city economies and its third-largest exporter after Shenzhen and Shanghai. Growing at an annual rate of nearly 20 per cent for 20 years, this boomtown, just 100 km north of Hong Kong, effectively sets the global price for many light consumer products. It is also home to some of the Chinese mainland s wealthiest consumers. Dongguan s export capabilities are unmatched for a city of its size. Exports of toys, shoes, furniture, cameras, watches and plastics account for more than 10 per cent of national figures. It has developed a modern industrial system with electronics, machinery, garments, food, plastics, printing and building materials providing its pillars. Relocation of light manufacturing from Hong Kong, just over two hours away by road, has helped propel Dongguan s extraordinary growth over the past 20 years. It has also contributed to Hong Kong s rise as a value-adding service economy, managing vast trade flows from China s factories to the world s markets. Dongguan is easily accessible by water and land. The combination of Hong Kong s global services platform and Dongguan s productive capacity is excellent for companies looking to lower costs, diversify production, source finished products and components more efficiently, or sell more successfully in the world s most exciting new market China. The Hong Kong-Dongguan business model allows you to centralise high-value activities in Hong Kong, such as management, design, trade financing, marketing and logistics, while locating production in Dongguan, where you have access to modern, integrated industrial systems and skilled labour at globally competitive prices. Foreign companies can supply raw materials, accessories and parts to Dongguan via Hong Kong. 1

2 Top five reasons to choose Dongguan Among the lowest production costs anywhere Tax holidays for foreign investors Efficient and integrated supply chains Good transport and logistics Deep interaction with Hong Kong Among the lowest production costs anywhere In Dongguan, you can hire factory labourers, administrative staff and technical personnel at highly competitive rates. Wage levels for migrant unskilled workers have remained steady for a decade. With an almost unlimited labour supply from other parts of the mainland, you can reliably forecast basic labour costs for years to come. Dongguan s export capabilities Mainland s third-largest exporter Exported goods account for over 7 per cent of the national total in 2002 Exported goods worth nearly US$24 bn in 2002, up 25 percent 85 per cent of factories in Dongguan are engaged in export-related production Value of exports is nearly three times Dongguan s GDP Tax holidays for overseas investors Flexible and favourable policies are offered to overseas companies investing in Dongguan. Local authorities are keen to facilitate investors throughout the process of establishing a business there, be it a Chinese-foreign joint venture, a wholly foreignowned company or a representative office. Procedures are basically the same as any other region in the Chinese mainland. By locating your manufacturing operations in Dongguan, you enjoy a full, two-year corporate tax holiday, and for three more years pay just half the going tax rate. Corporate profit tax for general manufacturing is 24 per cent and is collected by state and local tax bureaus. A preferential rate of 15 per cent corporate tax is levied on high-tech industries. New enterprises are able to import own-use capital equipment on a tax-free basis for high-tech industries, industries encouraged by the government, R&D facilities. Raw materials are exempt from import tariffs if they are used for export processing. Average tariffs, including those for machinery and other industrial goods, currently stand at 11 per cent, and average tariffs will be reduced to about 10 per cent by The Chinese mainland is a single customs territory. Dongguan thus follows the same unified set of rules and regulations governing China s international trade. The 2

3 Customs General Administration of China is responsible for assessing and collecting tariffs. Investment scoreboard Nearly 4,000 foreign-invested enterprises (FIEs) in Dongguan An additional 10,000 local enterprises engaged in outward processing for FIEs Active foreign investment topped US$17 billion by the end of 2002 Active foreign investment increased by nearly 19 per cent from 2001 to 2002 Over 30 of the world s top companies have set up shop in Dongguan FIEs account for 80 per cent of Dongguan s industrial production Efficient and integrated supply chains Factories producing similar products form natural clusters around the city. Related supply chains have sprung up to feed these clusters, shortening supply lines, boosting efficiency in inter-factory transfers and reducing production lead times. With ample supply of both upstream and downstream products, enterprises can easily find supporting industries and parts locally. For example, Dongguan boasts the world s highest output of electrical information products. Output of light industrial products is among the highest in the world. Up to 90 per cent of electronics accessories and parts are available locally. By locating production in Dongguan, your firm can benefit from its super-efficient, well-managed supply chains that streamline your production and trim costs. Good transportation, logistics and connectivity Modern highways, railways, waterways and nearby airports link Dongguan efficiently to the world. International container ports, within 2.5 hours drive of the city, are located in Hong Kong (Kwai Chung), Shenzhen (Yantian and Shekou) and Guangzhou (Huangpu). There is also a wharf for ocean-going vessels in the nearby town of Humen. There are a number of international air-freight facilities near Dongguan, including Hong Kong International Airport and Guangzhou and Shenzhen airports. Dongguan Railway Station is the meeting point of the Hong Kong (Kowloon)-Guangzhou and Hong Kong-Beijing lines. Communications traffic between Hong Kong and Dongguan is heavy for both voice and data. It is significantly cheaper to call Dongguan from Hong Kong than any other international destination. Rates are competitive with those charged domestically for calls between mainland cities. It is common for companies to operate private shuttles to transport executives between Hong Kong and Dongguan. Fast trains from Hong Kong stop at Dongguan three times a day and several coach lines offer daily, round-trip services from Hong Kong. On public transport, it costs as little as US$25 for a return ticket from Hong 3

4 Kong to Dongguan. By private car, it takes just over two hours from downtown Hong Kong. Immigration and customs clearance have been greatly speeded up on both sides of the border, which is now crossed by people and cargo 24 hours a day. Business synergy with Hong Kong There are over 8,600 Hong Kong companies having their manufacturing facilities in Dongguan. Of these, 2,250 are FIEs. The rest contract local factories to produce parts or products. Many were pioneer investors back in the 1980s. Largely as a result of this first-mover advantage, Hong Kong companies have enjoyed strong growth and high profitability. Hong Kong firms experienced in leveraging the Dongguan advantage are excellent sourcing or production partners. They respect intellectual property rights and the working environment of their factories conforms to the standards of overseas buyers. This makes them ideal partners for production of OEM, ODM and licensed products. Many of these Hong Kong companies have a strong presence at major international trade fairs in Hong Kong and can be found through the Business Matching databank of the Hong Kong Trade Development Council. Such three-way partnerships involving overseas manufacturers, PRD enterprises and Hong Kong expertise provide a proven and profitable business model. Overseas firms using Hong Kong as their platform for operations in the PRD benefit from stable, familiar institutions that safeguard contracts, intellectual property and free flows of people, information, cargo and capital. With simple, low taxes, Hong Kong is ideal for maximising profits while leveraging Dongguan s global competitiveness in production. Let the Hong Kong- Dongguan business model work for you! For further information, contact: Hong Kong Trade Development Council 38/F, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong Tel: Fax: hktdc@tdc.org.hk Website: The Hong Kong Trade Development Council (TDC) is the statutory organisation promoting Hong Kong s external trade in goods and services. We provide Business Matching and other services to help you source, produce or sell using Hong Kong as your platform and partner. Our global network includes offices in Guangzhou and Shenzhen. You can access TDC services online in Korean through our trade portal tdctrade.com, or by contacting us in Seoul or Hong Kong. 4

5 TDC Seoul Consultant 2 nd Floor, KWTC Bldg., 159-1, Samsung-dong, Kangnam-ku, Seoul, Korea Tel: Fax: seoul.consultant@tdc.org.hk InvestHK Suites , Level 15, One Pacific Place, 88 Queensway, Hong Kong Tel: Fax: enq@investhk.gov.hk Website: InvestHK is the Government department providing assistance to corporations looking for direct investment opportunities in Hong Kong, and promotes Hong Kong s many advantages as an investment and business hub in Asia. It has strong expertise on Chinese mainland-related investments, with three dedicated teams to promote direct investment from Beijing, Shanghai and other provinces in China. There is also a presence on the ground through the Hong Kong Government's Guangdong Economic and Trade Office. InvestHK Guangdong Office Flat 7101, Citic Plaza, 233 Tain He North Road, Guangzhou Postal Code: Tel: Fax: general@gdeto.gov.hk Dongguan Foreign Investment Inquiring Service Centre 1/F, Foreign Trade & Economic Cooperation Building, 33 Guan Tai Avenue, Dongguan, PRC Tel: Fax: webmaster@dgfsc.com Website: Dongguan Foreign Investment Inquiring Service Centre provides foreign companies with comprehensive, one-stop services for investing in Dongguan. Services include up-to-date information on setting up a business in Dongguan, as well as explanation and analysis of the latest trade and economic policies at municipal, provincial and 5

6 state levels. The Dongguan Foreign Investment Inquiring Service centre is a subsidiary of the Dongguan Municipal Bureau of Foreign and Economic Cooperation. Dongguan Municipal Bureau of Foreign and Economic Cooperation No. 33 Guan Tai Avenue, Dongguan, PRD Tel: Fax: